The issue of workplace relations plays an important part in Australia’s Economy. They include the issues of employer-employee relations. Under the industrial relations system, laws, institutions and processes are established to manage workplace relations. They focus on determining the process of setting wage levels and resolving conflicts in the labour market. This report will show the key characteristics, impacts and recent changes of Workplace Relations. Key Characteristics Labour is one of the four factors of production.
To achieve the most efficient level of production that is also internationally competitive, Australian needs a skilled labour force that is adaptable to change and redeployment across a range of jobs. The skills of a labour force depend on education and training. Redeployment depends not only on the continuation of the education and training, but also on the efficiency of the wage determination system. According to John Bulmer (Appendix B), “Australia needs a labour market that is responsive to changing economic conditions… a work force whose skills are more adaptable.
If these conditions are not met, then changing economic conditions will result in rising levels of unemployment. “1 Wage setting is an important part of Workplace relations. Under industrial relations there are three ways to set the wage level of an employee. There is the award, which is the minimal employment standards that employers must ahead to due to the Fair Pay and Conditions Standard. The Collective Enterprise agreement is common in Australia as the agreements are negotiated between the employers and a group of employees.
The individual contract is negotiated between employer and employee and come in the form of Common-law Contracts and Australian Workplace Agreements. Workplace relations are a combination of these characteristics as well as controlling other issues of employee and employer relations. Through industrial relations these characteristics are regulated through a number of laws and processes. Impacts on the Economy Workplace relations affect the economic growth and productivity of the economy. Productivity is defined as the ratio of output over input. As a firm tries to maximise its profits, it will try to increase output without increasing costs.
Many diseconomies of scale come from workplace relations, such as increased costs to deal with any problems that arise between employees and employers, and increased costs that come from a high minimal wage. Where workplace relations have become more flexible, costs have become lower and output has increased, thus an increase in productivity. Here in the diagram bellow from Appendix C we can see the labour productivity of Australia against that of the United States. It can be clearly seen that our productivity is not as high as the United States, but it has been on the rise from 1.7% p. a. to 2. 5% p. a. 2 Inflation is also affected by workplace relations.
A major part of workplace relations is wage setting, and with the rising living standards, due to increasing productivity, so does the wage level. With increasing wage prices will come increasing spending and increased inflation. There is also a rising of the minimum wage which will push up the wage price. As seen in Appendix A the newspaper article from the Financial Review Union Wage Claim Threat to Employers brings up the issue of increasing the minimal wage versus the pressure on inflation.
While the Australian Council of Trade Unions (ACTU) wanted the Australian Fair Pay Commission (AFPC) to raise the minimal wage, only six months after the last rise of the minimal wage. According to Peter Anderson (Australian Chamber of Commerce and Industries’ director), “inflation had moderated and if the commission is inclined to award an increase, then it should be moderate and it should not apply within 12 months of the precious increase. “3 This though may not be the case as most Australians are not on the Award; rather they are on individual contracts – mainly common-law contracts.
The following graphs from Appendix C show the comparison between wage rates and inflation. It can be seen that there is some correspondence between the two graphs, but they are still very different. Though both the Wage Price Index Year-ended and the CPI Year-ended increase around the same time periods, the CPI increases to a greater extent, suggesting that there are many other factors contributing to the rise in inflation. 4 Both growth and productivity and inflation are effected due to changes in workplace relations. It is the government’s responsibility to change industrial relations to control these impacts.
Recent Changes Under the Howard Government there have been two major changes to industrial relations. These two changes have dramatically altered Australia’s Labour Market. Workplace Relations Act 1996 Before the Howard Government came into power, the Australian Labour Party was in power, and had a strong policy on employee favoured industrial relations. A more in-depth analysis of the Workplace Relations Act can be found in Appendix B. The decentralised the labour market as (seen in Appendix E) they want to “focus on giving primary responsibility for industrial relations and agreement-making to employers and employees. “